Industry insiders: there is a high probability of reducing global sugar production in 2015 / 2016.

With the increasing patency of international raw sugar import channels and the expansion of domestic raw sugar processing capacity, the impact of international sugar prices on the domestic market is also magnified, and the correlation between the two markets begins to improve. However, since 2015, there has been a reverse trend in domestic and foreign markets: international sugar prices have continued to decline, from a peak of 16.16 cents / lb to 11.91 cents / lb, while the domestic Zhengtang futures price has risen from 4636 yuan / ton to a maximum of 5445 yuan / ton.

The logic behind it is the determination of the shrinking of domestic acreage and the trend of yield reduction. Gao Wang, an analyst at Citic Futures, pointed out that China's sugar production fell sharply during the 2014-2015 extraction season. It is estimated that the national sugar production will be about 10.5 million tons, down 2.8 million tons from the previous pressing season, and the reduction will reach 21%. This provides a great support to sugar prices.

In terms of import, at present, sugar is included in the automatic import license management. According to CITIC Futures, the quantity within the quota should be 1.3 million tons, outside the quota, the industry self-discipline is 1.9 million tons, and according to market conditions, import rhythmically, except for 400000 tons of Cuban sugar, the circulation is expected to be 2.8 million tons; the inventory carried forward during the last crushing season is 1.9 million tons, plus 1 million tons of raw sugar carried over, the total supply is estimated to be 16.15 million tons, consumption is expected to be 15 million tons, and negotiable inventory is about 1.15 million tons. "A large part of these 1.15 million tons is expected to be raw sugar, and the price of sugar in the later stage largely depends on consumption, import volume and import festival."

In 2014 / 2015, according to Guangxi 400 yuan / ton sugarcane accounting, the lowest production cost of white sugar is more than 4400 yuan / ton, but some enterprises even in 5000 yuan / ton, the median value is 4600-4700 yuan / ton, taking into account the increase in financial costs, the industry needs 4700-4800 yuan / ton to break even.

Industry insiders believe that the domestic production reduction in 2014 / 2015 is determined that domestic production will continue to be reduced in 2015 and 2016, and the State Reserve inventory will decline rapidly in 2016.

Compared with the domestic production reduction cycle, the international sugar market still has an oversupply, but the international sugar price continues to decline, which has affected the international sugar production.

Sun Tong, founder and CEO of Brick Agricultural products acquisition Network, pointed out that in the short term, due to India and Pakistan's export of raw sugar through subsidies, coupled with the continued devaluation of the Brazilian currency, the cost of raw sugar production in Brazil dropped to 12-13 cents, while Thailand's sugar exports were not smooth, and there was a short-term opportunity to fall to 12 cents or 11 cents, but due to persistent low prices, it seriously suppressed the enthusiasm of sugar production in Thailand and India.

He believes that there is a great probability of global sugar production reduction in 2015 and 2016, including drought in Brazil in the summer of 2013-2014 (southern hemisphere), affecting the growth of sugarcane, coupled with a reduction in new sugar input, Brazil is more likely to reduce production in 2015 / 2016. The global sugar supply has gradually shifted from a surplus to a shortage in the past few years. Looking forward to the end of 2015, the international sugar price is expected to rebound to 15 cents.

Wang Jianfeng, an analyst at South China Futures, also pointed out that Brazil, as a major producer, has indeed seen a slow increase in sugar cane in recent years, but the production of raw sugar has not increased synchronously, but there has been an increase in fuel ethanol. The weekly increase or decrease in production is based on planting profits, and according to current prices, international sugar prices have not led sugarcane cultivation into a loss. Perhaps there will be a corresponding reduction in production in the next extraction season.

"in the medium to long term, sugar prices have entered a new upward cycle. in the short term, due to the excessive rise in sugar prices in the past month or so, some risks have been accumulated, and the internal and external price difference is too large, so it is difficult to maintain the current excessive internal and external price spread. we need to pay proper attention to the risk of pullback." Sun Tong said.

Gao Wang said that in the long run, China's sugar is in the destocking stage, maintaining the long-term uptrend view unchanged.